Investment on hold
Austria’s Doka holds off new factory investment till emergency rule ends
The Turkish subsidiary of Austrian concrete formwork technology company Doka is planning to build a new factory valued at 60 million euros after the state of emergency is lifted. In an interview with daily Dunya, Doka Turkey’s CEO Ender Ozatay expressed his confidence in Turkey’s construction sector and announced aims to increase his company’s 10 percent market share in the $550 million Turkish formwork sector.
“The company’s prospects in Turkey have not changed at all,” said Ozatay. The company made an investment valued at 25 million euros last year and is planning another worth 10 million euros this year, both signs of Doka’s confidence in Turkey, he said. Doka’s formworks are currently being used on 128 construction projects across Turkey, and the company operates in 16 of the 29 ongoing private-public sector partnership projects, Ozatay said. The company’s headquarters in Austria is pleased by this level of activity, he said.
Doka Turkey’s sales in the first three months of 2017 increased by 35 percent. “That’s a great kick off. We had planned a more controlled growth, but it was tremendous for the first three months, and our employment rose by 40 percent,” said Ozatay. The figures belie a construction sector whose growth has been slowing, but Ozatay said that it is the company’s mix of products helps it continue expanding.
According to Ozatay, the company operates in qualified building and infrastructure projects like bridges and viaducts, including those in Izmit and Canakkale. As health and safety concerns have become more important, the demand for formwork has increased too, he said. “Our company is specialised in secure formwork. ‘Safety first’ is written on our business cards, and for 40 years, our strategy has been based on safety. And it is now also recogniz ed in Turkey,” said Ozatay.
Leasing reduces investment
Construction is a capital-intense business, leading Doka Turkey to use its strong capital structure by leasing. This allows the company to finish projects without needing huge investments by the company’s clients. “The share of leasing in sales has increased from 5 percent to 40 percent since 2014. And at least one out of two contracts are now leasing,” said Ozatay.
Comparing to renting a car, companies don’t need to invest capital in formwork, Ozatay said. Leasing could make formwork purchasing companies in Turkey obsolete in the near future, as it has in Europe. “As you comply with job safety regulations, the initial investment costs increase and framework prices triple, if you choose a fully secure product,” said Ozatay. Leasing can reduce these costs. Doka currently operates in about 60 percent of Istanbul’s third airport, and half of this activity is with leased products.
New investment planned
Doka supplies 40 percent of its products locally, allowing the company to create significant added value to the Turkish economy, Ozatay said. It is also planning to build a factory in the central Turkish city of Cankiri at a cost of 60 million euros after the state of emergency is lifted. It is currently in talks with The Republic of Turkey Pri me Ministry Investment Support and Promotion Agency (ISPAT.) “We foresee an extra 200 jobs with this investment and will triple our workforce. We had anticipated the state of emergency would end in January and planned a board meeting on January 17, but it wasn’t the case. Now we are on standby,” Ozatay said.
The company already has offices in Istanbul, Ankara and Gaziantep, with another one on the way in Bursa. Ozatay said that the company sees significant potential in Gaziantep and Izmir. Doka operates in giant construction yards across Turkey. “Last year, 176 bridges were put into service, and this year we are building bridges in Amasra, Denizli and Gaziantep,” Ozatay said.
Construction slowdown is temporary
Ozatay’s mid-term outlook for the construction sector is that it will remain dynamic for at least another decade. As migration to urban centers continues, Ozatay thinks that the slowing trend in the sector is temporary and will not deepen. “The supply-demand balance can deteriorate from time to time. And it may be the case now. Some companies may have still have unsold housing as they have more than the demand,” he said.